Retailers look past apps to the next frontier of digital shopping: Chatbots

BySarah Halzack

April 18, 2017

Screengrabs of the chatbot shopping experience that Mastercard is launching with merchant partners. (Mastercard)

Artificial intelligence is being touted as a tool for addressing some of humanity’s most pressing problems, including climate change and cancer.

But starting this week, you can put it to work for something a little more prosaic: ordering a hoagie.

On Tuesday, Mastercard announced it has partnered with Subway and two other major merchants to launch “chatbots,” which are robots that simulate human conversation. The Subway iteration allows you to order a custom sandwich for pickup, something of a digital version of walking down the chain’s sandwich assembly line. There’s another from Cheesecake Factory that allows shoppers to purchase and send out gift cards, and a third from online grocer FreshDirect in which customers can place orders for groceries and meal kits. The bots will be found within Facebook’s popular Messenger app, and will be powered by Masterpass, the credit card giant’s digital wallet.

These big-name brands join a growing group of retailers that are experimenting with how chatbot technology can be leveraged for digital shopping. The debut of the bots will provide a fresh test of shoppers’ appetite for what the industry has dubbed “conversational commerce,” the idea of making a purchase or other customer service transaction through A.I.-powered messaging.

FreshDirect said its foray into chatbots in part reflected the changing reality of how customers use their smartphones.

“We know that asking someone to download an app, it’s a hard thing to do now,” said Lisa Kolodny, FreshDirect’s vice president of brand marketing and communications.

Here’s what Kolodny means by that: Consumers are spending more time online, and yet they are concentrating those minutes in a very limited number of apps. Retailers — along with hotels, rental car services, and other businesses — are realizing that the best way to snare your interest online might not be with a killer app of their own, but by creating bots that live in the apps that you already use.

Facebook has said that more than 33,000 bots have been created for its Messenger app so far. This latest batch demonstrates how differently businesses are approaching the technology at this early stage of the game.

Subway, for example, essentially tried to re-create its in-store experience on the small screen. In a demonstration of how the technology works, the bot asks what kind of cheese you prefer, how thick a coat of mayonnaise you want, and so on — all in a very chatty voice. (When it wants you to indicate whether you want your sandwich toasted, it asks, “Wanna get toasty?”)

“We talk a lot about communicating not as a brand, but as a friend, and really engaging with your consumer in a very personal way,” said Linda Kirkpatrick, Mastercard’s executive vice president of merchants and acceptance.

Meanwhile, Cheesecake Factory decided to use the bot for gift cards because they reflected what customers are often doing when they come to one of their nearly 200 restaurants.

“We are a place that a lot of people go for celebrations,” said Donald Evans, the restaurant’s chief marketing officer.

FreshDirect’s bot will try to play on the social nature of the Messenger experience. Its allows shoppers to form a group thread in Messenger, so that multiple people can collaboratively build a grocery list. Kolodny said they envisioned this being used by big families or groups of friends as they join up for summer trips to beach houses or campgrounds. But perhaps spouses or a group of roommates could use it for more routine shopping trips.

Subway’s bot is being rolled out to customers on Tuesday; the ones from FreshDirect and Cheesecake Factory are still in pilot mode and will be made available for wider use in the coming months.

So just how big a role will chatbots play in the future of shopping? At this point, it’s hard to know.

For starters, consumers simply haven’t had that many opportunities to engage with them yet: According to a survey by Forrester Research, just 4 percent of companies have a chatbot. Plus, the long-term potential of the technology has not been fully realized.

“This isn’t yet what I would call an efficient medium for the exchange of data,” said Julie Ask, a consumer technology analyst at Forrester. “It still has a ways to go before it’s more convenient than the other options that consumers have.”

Right now, bots are typically designed to help with specific, narrow tasks. But, as Ask puts it, these bots typically can’t handle “a wide-open wish.”

As that changes, consumers might be more apt to make a habit of turning to bots for help.

Sarah HalzackSarah Halzack is a Bloomberg Opinion columnist covering the consumer and retail industries. She was previously a national retail reporter for the Washington Post. Follow